The numbers: Falling gasoline and used car prices kept inflation in check in May and inflationary pressure continued to decline. Englisch: www.cosmetic-business.com/en/showar…p?art_id=944 April rose just 0.1
In particular, the increase in the cost of living has slowed from 2% to 1.8% in the last 12 months. The inflation rate has fallen by nearly 3% since last summer.
Another closely watched inflation measure, which consumes food and energy, has also gained only a meager 0.1% in the last month.
The annual rise in the so-called core rate has dropped from 2.1% to 2% – in line with the Federal Reserve's inflation target.
Read: Weak Trade Unions, Globalization Not Responsible for Declining Income Yield for Workers
What happened: Food costs rose 0.3% in May, accounting for nearly half of the rise in the consumer price index out. Medical care increased by 0.3%, rents rose by 0.2% and airline tickets also rose.
Gasoline prices fell 0.5% in May, after rising nearly 6% in April. With falling oil costs, gas prices could even fall for the time being.
Used car prices also fell by 1.4%, marking the fourth consecutive decline.
Apparel prices remained flat after two consecutive declines.
Adjusted for inflation, hourly wages increased by 0.2% in May. They rose by a modest 1.3% last year.
Overall picture: The decline in inflation mainly reflects lower energy costs and a more moderate increase in health care.
However, there are indications that the recent downtrend may soon come to a standstill and inflation could remain close to Fed 2% gate. On the one hand, rents continue to rise, and healthcare costs no longer seem to decline.
If inflation stabilizes at 2%, the Fed would have more leeway to determine when to lower interest rates. As long as the economy continues to grow and the ongoing trade wars do not unbalance it, the central bank can be patient. But when the economy slows again, the Fed will act quickly.
Read: "Touch of the US Recession"? It's back in the air, but the strong labor market is the antidote
What They Say: "Apart from rents, the consumer price index is very busy," he said chief economist Chris Low of FTN Financial, who believes the Fed should cut interest rates.
"Inflation at the current track rate prevents or does not impose any action on the rates," said senior economist Eric Winograd of AllianceBernstein. "It's low enough to allow interest rate cuts, but not so low that it's necessary." However, Vinograd expects the Fed to cut interest rates once or twice this year.
Market Reaction: The Dow Jones Industrial Average
and S & P 500
The 10-year yield of the state treasury
slipped to 2.12%.